Parametric selection of income tax, ST cases: computerised balloting on November 13

The FBR has finalised arrangements for the parametric selection of income tax and sales tax cases via computerised balloting on November 13 in a bid to avoid future litigations, tax experts said here on Sunday.
A High Court judgment had declared a computer balloting held on December 11, 2009 illegal. In the past, High Court had accepted the petition of the taxpayers on legal grounds and quashed the computerised balloting of 2009. The court held that the selection of cases by computer ballot for a composite income tax and sales tax audit was without lawful authority and of no legal effect. The FBR should learn from past mistakes keeping in view judgements of court on computer balloting.
According to the past judgment of High Court, for all of foregoing reasons, the court is satisfied that the petitioners are entitled to the relief that they are seeking. Accordingly, the computer ballot of December 11, 2009, and the selection of petitioners for a composite income tax and sales tax audit thereby, and all audit proceedings held thereunder, or in consequence thereof, are quashed and declared to be without lawful authority and of no legal effect. Any orders purported to have been passed in relation to, or based on, any such selection or audit proceedings are likewise quashed and declared to be without lawful authority and of no legal effect, it added.
The extracts of the judgment revealed that the exercise of statutory powers of audit under Income Tax Ordinance, 2001 could not result in action being taken under Sales Tax Act, 1990 for each being governed by its own provisions. The section 214C would affect vested rights but not past and closed transactions.
Taxpayer could be selected for an audit only once in respect of a given tax year. Once an audit had been called in relation to a taxpayer and was being had been conducted or having been called as abandoned by department of its own volition then taxpayer cannot be vexed again by selecting his case a second time for audit of the same tax year.
Once a person has been lawfully and properly selected, the department is entitled to comprehensively examine the income tax affairs of the taxpayer by carrying out a complete and robust audit. Each tax year would be a separate unit of assessment, it added. The C.P. No 973 of 2010, was decided on April 6, 2011 by Sindh High Court.